Shanghai Smog Sinks Yanzhou as NQ Jumps: China Overnight

Chinese equities fell in New York as Yanzhou Coal Mining Co. fell to a three-week low on concern China’s increasing air pollution may push the government to curb the use of the fuel.

The Bloomberg China-US Index of the most traded Chinese stocks in the U.S. fell 0.5 percent to 108.16 yesterday after rising in the previous four weeks. American depositary receipts of Yanzhou, China’s fourth-largest coal producer, sank 2.7 percent while China Eastern Airlines Corp. declined to a two-week low as Shanghai’s worst smog on record caused flight delay and cancellations. E-Commerce China Dangdang Inc. slumped the most in three weeks.

The air quality index in Shanghai surged to a record 482 on Dec. 6, disrupting flights and prompting authorities to order cars off the road and factories to cut output. Air pollution in major Chinese cities exceeded hazardous levels several times this year, and Premier Li Keqiang pledged in March to take steps that include cutting coal consumption.

“When you see that the headlines are coming out on smog and we see the government is trying to control growth in general, I have to think that’s going to weigh” on coal producers, Derrick Irwin, who helps manage $4.5 billion at Wells Capital Management Inc., said by phone from Boston yesterday.

The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., slipped 0.7 percent to $39.88 in New York, after surging 1.9 percent Dec. 6. The Standard & Poor’s 500 Index rose 0.2 percent, extending the biggest rally in four weeks, as investors weighed the timing of any cuts to Federal Reserve monetary support amid budget negotiations in Washington.

Thermal Slowdown

Yanzhou’s ADRs retreated to $10.15, the lowest close since Nov. 20. They are trading at 0.3 percent below the Shandong-based company’s shares listed in Hong Kong. Each ADR represents 10 ordinary shares.

Thermal power, mainly coal, will account for 69.9 percent of China’s installed capacity by year-end, according to the National Energy Administration, the first time the share has dropped below 70 percent. China has slowed thermal-power expansion in favor of alternatives to reduce its reliance on coal.

Shanghai-based China Eastern, the nation’s third-biggest carrier by sales, slipped 2.6 percent in New York to $19.49, set for the lowest level since Nov. 20.

At least 155 outbound flights and 191 inbound flights were delayed at Shanghai’s two airports Dec. 6-7, according to Bloomberg calculations based on data from the Shanghai Airport Authority’s website.

NQ Deal

Guangshen Railway Co.’s ADRs slumped 5.5 percent to $22.88, the lowest level since August. Dangdang’s ADRs dropped 4.8 percent, the most since Nov. 18, to $8.65. Perfect World Co., a Beijing-based online game developer, dropped 2.6 percent to a four-week low of $17.82.

The China-US gauge completed a four-week rally through Dec. 6, the longest stretch of gains in four months. The measure has advanced 9.1 percent this year, compared with the MSCI Emerging Markets Index’s 4 percent slide.

“We had a good run generally, it may just be markets are slow ahead of holidays,” Irwin at Wells Capital said.

Beijing-based NQ Mobile Inc. said yesterday it will provide mobile management services to a Japanese cleaning services and elderly care company. NQ’s shares added 0.2 percent, snapping a two-day decline to $12.57. Its shares tumbled 7.4 percent to a one-month low on Dec. 6.

Macau Casinos

Melco Crown Entertainment Ltd., an operator of casino facilities in Macau, gained 1.9 percent to $37.47, the highest level since its U.S. listing in 2006.

The government of Macau, the only Chinese city where casinos are legal, said it has no plan to increase gaming licenses, Ming Pao Daily reported, citing unidentified sources. The city plans to continue to limit the number of gaming tables, according to the newspaper.

The Hang Seng China Enterprises Index in Hong Kong advanced

0.5 percent to 11,432.92, rising the most in a week, while the Shanghai Composite Index climbed less than 0.1 percent to 2,238.20.

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